Question
[Case 1] Significantly fewer responses to confirmation requests are received than expected. [Case 5] Negative confirmation requests yield fewer responses than in the prior year's
[Case 1] Significantly fewer responses to confirmation requests are received than expected.
[Case 5] Negative confirmation requests yield fewer responses than in the prior year's audit.
11. [Case 1] vs. [Case 5]
[Case 1] is an example that an auditor may suspect that material misstatements arising from fraud exist in a client's financial statements. On the contrary, [Case 5] corresponds to a reduced likelihood of material misstatement, Because responses to negative confirmations are only received when there are discrepancies. A lower response rate of the negative confirmations is likely to be indicative of fewer problems with accounts receivable. A. True B. False
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